GST Revenue to Surpass Budget Estimates in FY26: SBI Research
India’s Goods and Services Tax (GST) revenue for Financial Year 2026 is projected to exceed government budget estimates, according to the latest analysis from SBI Research. The positive outlook comes despite recent tax rationalisation measures implemented across states.
Key Takeaways
- GST collections expected to surpass budget estimates in FY26
- Most states projected as net gainers post-rationalisation
- Maharashtra gains 6%, Karnataka gains 10.7%
- Temporary dip followed by sustained growth historically
State-Level Impact Analysis
The research indicates that most states will experience positive gains throughout the fiscal year following the GST rationalisation. Maharashtra is projected to gain by 6%, while Karnataka shows a significant 10.7% increase in revenue.
“Thus, overall states will remain net gainers post GST rationalisation,” the SBI Research report stated.
Tax Structure Changes
The GST rate rationalisation, introduced in September 2025, established a simplified two-tier structure of 5% and 18%, along with a 0% exempt slab and a new 40% demerit rate for luxury and sin goods.
Historical Performance Patterns
Evidence from previous GST rate changes in July 2018 and October 2019 indicates that rationalisation doesn’t necessarily weaken revenue collections long-term. Instead, the pattern shows a temporary adjustment phase followed by stronger inflows.
The report notes that while immediate rate reductions can cause a short-term dip of 3-4% month-on-month (approximately Rs 5,000 crore), revenues typically rebound with sustained growth of 5-6% per month.
“In past episodes, this dynamics is translated into additional revenues of nearly Rs 1 trillion,” the report added.
Recent Collection Trends
October 2025 GST collections showed positive momentum, rising 4.6% to approximately ₹1.95 lakh crore compared to ₹1.87 lakh crore in the same month last year. For the April-October period of 2025-26, GST collections increased 9.0% to about ₹13.89 lakh crore against ₹12.74 lakh crore in the same period last fiscal.
The growth was driven by increases in Central-GST, State-GST, and Integrated-GST collections, though cess collections showed a year-on-year decline.
